I’m the co-founder and CEO of Branders.com, the world’s largest and lowest-priced promotional products distributor. We put more logos on more stuff than anyone else on the planet. Not because we love t-shirts, mugs, and silly straws—although we do; but because we love helping our customers build their brands, whether they’re from Fortune 100 firms or Main Street mom-and-pop operations. I came to Branders with more than 20 years of marketing and operations experience in the financial, technology, and advertising industries. I’m also a former Marine. Bachelors degree from the University of Pennsylvania; JD from Temple Law School. My family and I spent four years in Manila and Shanghai; now we call Palo Alto, California, home.

The Brand Payoff

How much is a brand worth? That’s the question that firms like Interbrand try to answer, by isolating the value of a brand from the sum of its vendor’s other assets. Put it this way: would you rather own all the factories, trucks, and offices that belong to Coca-Cola – ranked #1 for the 12th consecutive year in Interbrand’s annual “Best Global Brands” report; or would you rather own the exclusive worldwide right to market a soda under the Coke trademark?

Quantifying the net worth of any particular brand isn’t easy, as you might imagine. There are all kinds of factors to consider – from brand recognition to target audience to first-mover advantage. But regardless of the factors at play, ultimately the value of a brand is tied to its capacity to increase profits for its owner. In the marketplace, a strong brand accomplishes this in three ways.

First, a strong brand protects the volume of business that a company gets. When customers buy as if there is no good substitute for their preferred brand, the preferred brand has insulated itself against losing sales to competitors. In this way, a strong brand protects its owners against sales shrinkage, irrespective of the quality of its competition. I don’t know, for example, if a coffee aficionado would pick a Starbucks product over a latte from McDonald’s McCafé in a blindfolded taste test. But customers don’t buy lattes blindfolded. And for most Starbucks regulars, a Frappé from McDonalds just doesn’t hold the same appeal as an honest-to-goodness Frappuccino.

Second, a strong brand boosts margins. The most robust brands enable their companies to increase profits by simply increasing prices. If customers have a strong preference for your brand and you decide to raise your prices, most will stick with you and continue to consume a relatively undiminished quantity of your product. When Warren Buffett and Charlie Munger bought See’s Candies, they did so knowing that customers had such a fierce devotion to See’s that they could move prices up without driving sales down. They did, and it worked. Since acquiring the famous candy company, they have raised prices many times, much faster than the rate at which candy-making costs have risen. They used the strength of the brand to improve margins and thereby improve profits.

Third, a strong brand buffets a company from external circumstances. Even at the height of the global recession, Apple profits continued to dazzle investors and analysts alike. (In 2009, one Forbes.com headline read simply, “Apple Kills Recession.”) Consumers have raced to purchase every new iteration of the iPhone, even as the economic downturn has squeezed profits for many other companies, not to mention whole industries and sectors. Strong brands serve as safeguards against uncertainty – perhaps the most resilient kind of asset in these volatile times.

A strong brand protects your sales, improves your margins, and ensures your resilience. It’s a valuable asset – and, for some businesses, their most valuable asset. That’s why we all should want to actively build our brands: it’s where the money is.

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